If 2022 was supposed to be the year when you started investing for the first time, but you changed your mind, it’s time to reconsider your strategy for 2023. While 2022 was a particularly challenging year due to inflation, high interest rates, and macroeconomic and political factors, the next year might bring better prospects for growth. Having a clear investment strategy in mind can help you be prepared for whatever comes. Nobody can know for sure whether 2023 will be a volatile year or one that sees things settle at a global economy level. However, investing some of your money now can help you enjoy returns further down the line. Here are some of the top investment strategies to consider for 2023.
Diversification Is Key to Stability
What every beginner investor fears when buying their first stocks, bonds, ETFs or even cryptocurrencies is instability. Every market has its own dynamics and assets’ prices can see large fluctuations, especially in volatile markets like the cryptocurrency market. That’s not to say that investors should avoid those assets or any other types of assets because high volatility can also bring high returns. However, if you’re barely getting started and you want to minimize your risks, diversifying your investment portfolio is a good idea.
Instead of investing all your money in a single asset such as the shares of company X or Z, you can invest in a collection of different assets with different risk levels. ETFs or exchange-traded funds can be a good option because they can offer a basket of different securities. Alternatively, you can invest separately in different instruments such as bonds, shares, mutual funds, digital assets, etc. The point is to diversify your portfolio so that you don’t risk losing it all if one investment strategy fails.
Look for Renewable Energy Stocks
With all that’s been said and written this year about a looming energy crisis, the search for renewable energy sources is more important than ever. Companies are looking forward to cutting energy costs and minimizing their carbon footprint by transitioning to green energy. Consumers are also looking forward to reducing their utility costs by relying on renewable energy. All this has an impact on the energy market and not only.
One of the trends that could dominate 2023 is buying energy transition stocks. This means doing some research to find companies that create or invest in renewable energy technologies and buy shares in those companies.
A related market that seems to be expanding is that of electric vehicles. While Tesla remains the biggest name associated with these vehicles, there are many other companies now focusing on EVs. This is a market that’s expected to exceed $820 billion by 2030, so it’s worth considering buying and holding these stocks in 2023.
Buy Certificates of Deposit or Government Bonds
Certificates of deposit, also known as CDs, are some of the classic investment types that never lost their appeal because of their stability. If you’re not ready for a high-risk investment, especially in these times of uncertainty, CDs are a good idea to get started with your investment endeavor. These are savings accounts that help you gain interest on your initial deposit. The deposit is calculated based on your investment amount and a fixed period during which you need to keep the certificates of deposit. The advantage is that the interest is typically larger than what you get by opening a deposit account in a bank and the investment is safe as it is FDIC-insured in the US. The term length is also flexible, some CD’s term is a few months, and others have lengthier terms of five to ten years.
If stability is key to your investment strategy in 2023, government bonds are another option you might want to consider. Bonds refer to money you lend to a specific borrower, in this case, the government. In exchange, you will get the amount you lend back at the end of the bond’s term, plus a specific yearly interest rate.
Invest in Metaverse Stocks
The metaverse is not only a buzzword. It has become one of the trendiest investment opportunities, with more and more tech companies looking forward to expanding their business in this direction. The metaverse represents a virtual universe that offers myriad opportunities for leisure, entertainment, and more.
Not only companies are tapping into this promising sector. Public entities and celebrities are taking an increasing interest in the metaverse where they offer NFTs or non-fungible tokens. NFTs are cryptographic assets that run on a blockchain, just like cryptocurrencies. However, unlike cryptocurrencies and tokens that can be traded as they are identical or fungible, these assets cannot be exchanged for other NFTs at equivalent value. These digital assets can also represent real-world items, such as artwork, or even real estate.
Whether you invest in the metaverse by buying shares in companies whose business is connected to this emerging domain or by buying NFTs, you can position yourself one step ahead of investors who prefer more traditional assets.
Disclosure: article by Peak Global Management Japan press release team.